Staff Report
Published Oct. 26, 2012

BlueCross BlueShield of South Carolina and Providence Hospitals have agreed to a restructured pay system that uses bundled payments to reimburse providers.

Under the arrangement, which is being used for the first time by a major S.C. insurer, BlueCross will pay the hospital and physicians for a patient’s single “episode of care.” For example, the payment would cover all services related to a particular surgery, the Columbia-based insurer said.

Bundling payments encourages medical providers to deliver services efficiently and also allows them to share in the cost savings, the insurer said.

“As hospitals are facing mandates to reduce readmissions, reduce patient safety failures and improve the value of services provided, and as physicians are facing reduced fees from Medicare, this payment method encourages caregivers to work in teams, share information and take collective responsibility for a patient’s health,” said Laura Long, BlueCross’ vice president of clinical innovation and population health.

BlueCross and Providence contracted recently to begin the bundled arrangement for coronary artery bypass surgery for members of BlueCross as well as BlueChoice HealthPlan of South Carolina. In this case, the patient’s episode of care includes all services related to coronary artery bypass surgery performed over 90 days.

BlueCross will provide Providence with a comparison of its complication rates against regional and national levels. Then, the hospital and the patient’s medical team will collaborate to reduce those complication rates and improve patient outcomes.

As an incentive to manage costs, the providers share the savings when the total cost comes in under the budgeted projection, BlueCross said.

“This is really about our processes, so we anticipate that it will be invisible to the patient,” said George Zara, president and CEO of Providence Hospitals. “For us, being able to have the extra data that BlueCross will provide is significant in terms of enabling us to practice evidence-based medicine that we know will lead to higher quality care and potentially improved health outcomes.”

BlueCross said it hopes to expand bundled payments to services provided at two other hospitals in other parts of the state before the end of this year.